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The Robustness of Incomplete Penal Codes in Repeated Interactions

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  • Olivier GOSSNER

    (CNRS – CREST, Institut Polytechnique de Paris and Department of Mathematics, London School of Economics.)

Abstract

We study the robustness of equilibria with regards to small payoff perturbations of the dynamic game. We show that complete penal codes, that specify players’ strategies after every history, have only limited robustness. We define incomplete penal codes as partial descriptions of equilibrium strategies and introduce a notion of robustness for incomplete penal codes. We prove a Folk Theorem in robust incomplete codes that generates a Folk Theorem in a class of stochastic games.

Suggested Citation

  • Olivier GOSSNER, 2020. "The Robustness of Incomplete Penal Codes in Repeated Interactions," Working Papers 2020-29, Center for Research in Economics and Statistics.
    • Handle: RePEc:crs:wpaper:2020-29
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    References listed on IDEAS

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    6. Johannes Hörner & Takuo Sugaya & Satoru Takahashi & Nicolas Vieille, 2011. "Recursive Methods in Discounted Stochastic Games: An Algorithm for δ→ 1 and a Folk Theorem," Econometrica, Econometric Society, vol. 79(4), pages 1277-1318, July.
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    Keywords

    Repeated games; stochastic games; Folk Theorem; robust equilibrium.;
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